Cameron's Conservatives, even when one is trying one's hardest not to be tribal, and one's best to be charitable, are both silly and scary. Clegg's Lib Dems, propping up an ambitious but incompetent government with baffling enthusiasm, are tainted by association, possibly fatally. Yet even by comparison with this hapless, chinless coalition, Miliband's Labour still fails to look remotely inspiring.

It's fair to say that this is not a golden age of politics. Yet there on their tiny, sinking, raft of failure, the government and opposition, plus their media entourages, still fight (valiantly, they probably think), to the ideological death. All three main political parties are dead on their feet, though. The Punch-and-Judy crudeness of Westminster debate looks and sounds more grotesque and pathetic every day.

Yet even though the mistakes that have been made in recent decades, and the consequences they have reaped, become more abundantly clear each day, the will of the mainstream to reach out for genuine solutions still seems horribly weak. The other day, when the governor of the Bank of England, Mervyn King, suggested that "the price of this financial crisis is being borne by people who absolutely did not cause it", his words were treated as controversial. Instead, they are obvious enough to be facile. Not a soul in this country with even a passing interest in politics and economics does not understand, broadly but accurately, what happened, and why.

Both main parties had busied themselves with handing power over to the international financial sector for three decades, and their political surrender created an unaccountable financial elite that was and is, famously, too big to fail. It is too big, even, to be bossed around now that it has failed and been bailed out, apparently. A couple of years on from the crash, and still the nation waits fretfully for a coming report that will suggest some possible reforms. How can reform of the public services be so urgent, and reform of the financial sector so . . . laissez faire? It's purely because politicians have themselves made the financial sector so monumentally powerful that it has become an unelected court of Versailles. Their paralysis is born of a refusal to own up, even to themselves.

Many commentators are fond of pointing out that the government does not have a Plan B. Many other commentators are fond of pointing out that the opposition does not have a Plan B either. They are all wrong, all of them. The government and the opposition both have a Plan B.

It's a Plan A that each of them is lacking. The reactions for the two main parties may be different (not that different – cut faster, or cut more slowly). But they are merely reactions all the same. Not actions.

Both parties are looking to the private sector to provide Plan A, which is economic growth, and for the City to underwrite it. But the trouble is that the financiers have no structural need or obligation to consider how to make people in Britain more prosperous, more socially mobile, healthier, better educated, more cultured, fairer and so on. They have no incentive at all to formulate a Plan A. Their job is to make money, the (discredited) idea being that as long as they do, then social benefit will accrue. There are plenty of other economies in the world where profit is considerably easier to make because populations expect so much less from their government.

So, the politicians thrash on, busy creating chaos, in some part because it would be too exposing to reveal that there's not much else to do. The Conservatives blah on about making the state smaller. Yet the state is small already, in terms of what politicians really have power over, even though it runs up big bills. How to spend tax revenue – that's what is meant by the word "politics" in Britain right now.

And with all parties ostensibly committed to "localism", the supposed aim is to devolve that job from Westminster too. Even the job of raising the revenue in the first place has been informally surrendered. No alteration to the tax regime is contemplated for long, if it becomes apparent that this might upset our apolitical political master, the financial sector, and cause it to flounce off.

Britain has reached political and economic stalemate. How to break it?

First, there needs to be recognition that there were alternatives to the deindustrialisation of the 1980s. There is already widespread understanding that any Plan A will have to involve a revival of manufacturing. But there also has to be an acknowledgement that British heavy industry really was in a poor state in the 1970s, and needed to change.

Tokyo-dwelling Irish journalist Eamonn Fingleton has interesting things to say, on the US website The Atlantic, about the way Japan that reformed its manufacturing industry, after its asset crash two decades ago. "The reason you don't hear much about Japanese manufacturers these days is that the best of them have moved from making consumer goods to concentrate on so-called producers' goods – items that though invisible to the consumer happen to be critical to the world economy." He has other interesting things to say, in an extremely stimulating piece.

Japan managed to maintain and develop a strong manufacturing sector, without going into competition with lower-paid overseas workers. It's harder to do that now, when so many economies are floundering, of course. The point is not that Japan has a blueprint for Britain. The point is that the government had choices in the 80s, and made poor ones, pretending that there was no choice to make. Labour accepted this assertion, and governed accordingly. The real lack of choice is the electorate's – the lack of choice between these supposedly conflicting political visions. The public needs to hear some Plan As, because right now British democracy is itself in major crisis.